Councillors approve £3.7 billion City Building - Wheatley Group joint venture

Published: 8 December 2016

Councillors today approved a 50/50 joint venture worth £3.7 billion with Wheatley Group, the parent company of Glasgow Housing Association, which will secure thousands of local jobs over the next 30 years.

The partnership between Scotland's largest council and the country's biggest social landlord will see Wheatley Group take a 50% shareholding in City Building Glasgow, becoming a partner and joint owner, with City Building undertaking all repair work for GHA and Wheatley's other social landlords in the west of Scotland.

As well as securing 2,000 jobs and more than 2,000 apprenticeships over the next three decades, the joint venture (JV) will also sustain employment for disabled workers at City Building, which has returned over £50 million (m) to the council since it was established 10 years ago.

Councillor Frank McAveety, Leader of Glasgow City Council, said: "This is the biggest deal of its kind in the UK. When the joint venture was originally proposed, it was valued at £2.7bn over the next 30 years, however significant additional value has been identified as the detailed business planning has been undertaken and refined, with an additional £1bn of value created.

"A range of other significant opportunities have been identified in the expanded business plan - for example, RSBi, City Building's specialist manufacturing division, which employs more than 260 local people, around half with disabilities, will undertake a range of additional work for Wheatley Group subsidiaries. Importantly, the JV will also invest £180m in training its people and improving skills over the 30-year period.

"The positive impact on our communities and on the wider Glasgow economy will be enormous. Securing 2,000 jobs and 2,000 apprentices is a fantastic legacy for the people of Glasgow, not to mention the thousands of tenants of Glasgow Housing Association who will enjoy an industry-leading range of services for many years to come."

Now that the council's Executive Committee has approved the joint venture, a shadow board will be created and work will start on formally establishing the new 50/50 JV from 1^st January 2017.

GHA Chair Bernadette Hewitt said: "Our priority is, and has always been, to ensure a first-class repairs and maintenance service for our tenants and factored homeowners and the new JV is the best way of doing this. We are pleased that plans are progressing well and approval for the joint venture by both Glasgow City councillors and Wheatley Board is an important milestone."

Stuart Patrick, chief executive of Glasgow Chamber of Commerce, said: "People and skills are at the heart of Glasgow's economic growth, which has outstripped that of many other major UK cities in recent years. This joint venture plays to the undoubted strengths of both organisations and will create prosperity and growth for many years to come."

This week's vote follows a report last month by respected economic researchers the Fraser of Allander Institute which revealed that City Building supports a turnover of nearly £325m across companies in the city.

The study confirmed that City Building directly employs 2,253 staff - nine out of 10 of whom live in Glasgow - and supports a total of 3,877 jobs across the city. In addition, the £63m paid in salaries to City Building's staff supports a total of £108.5m worth of wages generated across the city.

Amongst other key findings are that one in eight construction jobs in Glasgow is provided by City Building and that the company directly employs one in every 120 people in the Glasgow workforce.

The 50/50 joint venture goes before Wheatley Board on Wednesday December 14 for approval.

The joint venture's business plan is calculated to be £93-£99 million per annum over 30 years.

A further £23 million per annum of work will be carried out by RSBi, including current works from Glasgow City Council and additional opportunities within Wheatley Group's new build programme, e.g. kitchens, timber kits, windows and door sets.

In addition, a further £6 million per annum will be invested across the organisation in training.